Windfall Taxation is Lunacy
The left wing of the Labour party have written a letter to the Guardian calling for a windfall tax on the profits of oil and energy companies in the face of the rising costs of living. The problem is that this proposal is utterly illogical and counterproductive.
First, let’s look at some simple flaws in the thinking. A windfall tax can only be levied against those companies that operate in UK legal jurisdiction through ownership. When it comes to the oil companies, that leaves us with BP and half of Shell. Levying a tax on them would be damaging to British industry, hampering its ability to compete. As a result investment will go elsewhere and the overall tax revenues will decrease.
Any revenue raised will not help those in fuel poverty. With the public finances in as parlous a state as they are presently, the chances of revenues being ring-fenced for this purpose are roughly equal to Lord Lucan being found in bed with Nessie. It is a luxury the government simply cannot afford. Moreover, the proposed use of the money on a large-scale insulation scheme would take so long to implement that it would provide little in the way of tangible relief for those in fuel poverty.
More importantly, those who are going to modernise Britain’s energy supplies in the next decade will be the energy companies themselves. Taxing their profits, rather than encouraging responsible reinvestment, will hamper our ability to conduct research into cleaner forms of energy and power stations. Money will be diverted from research and development. The problems we need to deal with now will come back to haunt us later. The “victory” of a windfall tax would be Pyrrhic.
The only thing this tax is likely to provide more fuel for is the recession, worsening the lot of the poorest in Britain. The theory the proposal is based on is that the energy companies are squeezing the consumer to further their own self-interest. Just look at the language of envy the letter employs. Based on that assumption, the logical conclusion is that any increase in taxes, even if on a one-off basis, will be passed on to the consumer. The result: further rises in energy prices. A windfall tax is entirely counterproductive in that it will be the taxpayer, not the energy company, who ultimately pays it.
A windfall tax, if it is to exist at all, should only be used in the most extreme scenarios where no alternatives exist. If they are used outside these limited situations then they will scare off investors. The UK economy is already poorly placed to deal with the oncoming recession, and reducing profitability further will only worsen the investment environment. That will lead to further economic slowdown, the results of which will be greater unemployment, and rising costs of living.
The biggest oil profiteer
Let us for a moment however accept the logic of the letter. The idea is that the money gained in increased revenues from rising oil prices is hurting the citizen, and should therefore be redistributed to them. In that case the biggest culprit is not the energy companies, but the government. The UK pays the highest fuel taxes in Europe despite having some of the lowest fuel prices prior to taxation. If the money made from rising oil prices is “unearned”, then so is the increased revenue the Treasury gains from these taxes. The biggest beneficiary of the rise in oil prices has been Her Majesty’s Treasury, to the tune of around six billion pounds. That is far more than any windfall tax could provide.
If Compass seriously want to ease the cost of living for the poor, they should be encouraging Alisdair Darling to reduce its taxes on fuel and VED. This proposal for a windfall tax is little more than economically-illiterate unreconstructed envy politics. All it will do is help usher in another period of 1970s stagflation, all for the sake of a poorly conceived project that will be of little immediate benefit for those currently in fuel poverty.
Sphere: Related ContentCrewe and Nantwich: Who’s the Real Toff?
Every intelligent person on the left knows that Labour’s shooting itself in the foot in Crewe. They’ve turned a safe seat into a real contest. Criticism is even coming from the Guardian and Labourhome.
As someone else put it in The Times:
The Labour candidate is in Burke’s Peerage, her grandma was a Lady-in-waiting & she inherited the candidacy from her mum.
The Tory is from a family of cobblers & key cutters who fostered 80 deprived kids, inspiring him to take up family law.
And Labour say “Don’t vote for the posh toff”
Labour, after all, are hitting the poor with a stupid tax rise, and have decided that rather than fight on issues they’d prefer to prance around Crewe in top hats and tails. Rather more concerning to a class warrior though would be that they are actually wearing those clothes quite convincingly. Well, the chap on the right is. Someone needs to tell the fellow on the left of this photo that he needs to do his top button up though. Maybe Quentin Davies, that Clubland stalwart and multimillionaire ex-Tory turned Labour Class Warrior advised them?
I say old bean, let's go and patronise the workers
The contest is between a granddaughter of a Peer and a Labour Party General-secretary who is now riding on the coat-tails of her late mother’s political career, against the son of businesspeople known for their excellent treatment of employees and philanthropic activities, who pursued a career in family law to help the underprivileged. He is a classic example of a One Nation Conservative, and has been by far the more progressive candidate, especially against Labour’s patronising and vicious little dog-whistle campaign about immigration. Timpson is the true progressive in this election.
So I agree with Labour: don’t vote for the toff. What Labour fail to realise is that Moyra Tamsin Dunwoody-Kneafsey and her Labour chums are the real toffs in this election.
UPDATE: It turns out that the chap on the left (Alex Norris) actually went to public school. My comments about his top button are scaring me now, as the school he went to (Manchester Grammar) used to be headed by a Dr. Martin Stephen. Dr. Stephen is now High Master of St. Paul’s School, where he caused controversy by cracking down on pupils who failed to do up their top button. Mr. Norris Esq. has no excuse for his sartorial misdemeanours now.
Sphere: Related ContentThank You
I want to personally thank every left-wing activist who helped Boris into office this morning.
First, I’d like to thank the tireless smear campaigners in Compass and elsewhere for their continued misrepresentations of BoJo. You set expectations so low among some that all Boris had to do was turn up somewhere and smile and immediately his impression among voters would improve. You made him out to be so stupid that when he actually said something intelligent, the contrast was such that it made him appear doubly clever. The contrast between expectation and reality was so great that it probably generated more votes than it lost. Thank you for the inadvertent boost to his image that you gave him.
Thanks for lying so hard. It backfired marvellously when exposed.
Big thanks to every activist who tried to make this a negative campaign. It allowed us to dominate the positive agenda, resulting in the Tories being the only party with a clear and achievable set of policies and the demonstration that Labour is a spent force. We came up with so many policies that both Ken and Brian felt obliged to steal some of them. I would like to congratulate every negative campaigner who got out the Tory vote and turned people off Labour with misrepresentations. They galvanised all those who discovered the extent of the deceit involved, and ensured they endured the elements to get out and vote. Well done.
Thank you for making Boris out to be a clown. Your refusal to take him seriously meant that we had an easier time promoting our agenda. Promoting him as a bumbling charming fool one minute neutralised your claims to his being a demonic Machiavellian schemer the next.
And really big thanks to all those with the eminently mature “fuck Boris” facebook photos. When viewed in the facebook mini-format they were virtually indistinguishable from the “back Boris” photos. This helped us appear to have even more support on facebook.
Finally, thank you to all who promised to leave London if he won, as well as all the other apocalyptic rhetoric. Crying “racist” soon turned to crying wolf (especially when there’s now a real racist in the London Assembly). By decrying Boris as Satan incarnate you made sure that many voters didn’t take you seriously. Thank you for doing the job for us.
So thank you anti-Boris activists everywhere. We couldn’t have done it without your help.
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